US court ruling on tax may cost India $37 million
Ashish Kumar Sen writes from Washington
The U.S. Supreme Court on Thursday ruled that New York City can take
India to court for not paying taxes on a property it owns in Manhattan.
The city claims the Indian government owes $37 million in interest and
unpaid property taxes for the building housing the Permanent Mission of
India to the United Nations.
At the centre of the dispute is the 26-floor, red granite building
designed by Charles Correa, a prominent Indian architect. As of February
1, 2003, the Indian government owed about $16.4 million in unpaid
property taxes and interest. The city says that amount has since risen
due to an 18 per cent per annum interest rate. The Mongolian mission is
also named in the lawsuit.
The Supreme Court ruled 7-2 in the City of New York's favour. Justice
Clarence Thomas, giving the opinion of the court, noted that under New
York law, property owned by a foreign government is exempt from taxation
if it is "used exclusively" for diplomatic offices or for the quarters
of a diplomat "with the rank of ambassador or minister plenipotentiary"
to the United Nations.
The PMI building is owned by the government of India. Several floors are
used for diplomatic offices, but approximately 20 floors contain
residential units for diplomatic employees of the mission and their
families. The employees — all of whom are below the rank of Head of
Mission or Ambassador — are Indian citizens who receive housing from the
mission rent free, the Supreme Court noted.
cont'd....
http://www.tribuneindia.com/2007/20070616/main7.htm